Opinion

No easy way out for US

(China Daily)
Updated: 2010-02-06 14:51

The recent tough talk US President Barack Obama made about China's currency policy certainly revealed a sense of urgency after he vowed in his first State of the Union address to double US exports over the next five years, an increase that will support 2 million jobs in America.

Given the deteriorating domestic employment situation, it is understandable that the US government must be fretting about the difficulties in seeking overseas markets nowadays. After all, US manufacturers have to try their best to fight both the worst global recession in decades that has considerably depressed international trade and the rise of numerous low-cost competitors from emerging economies to win foreign orders.

By irresponsibly blaming Beijing's currency policies for giving Chinese companies an unfair price advantage, however, the US government seems to look for only an easy rather than a real solution to boost US exporters' competitiveness.

Unfortunately, there will be no easy way out of the steepest economic slump since 1930s.

If the United States wants to revive its economy by exporting more, it has to face the huge income gap between its workers and those from emerging economies.

A case in point: With Chinese workers earning about one tenth of what their American counterparts make, General Motors has become a big success in China last year while being basically a business disaster at its homeland.

Compared with the immense difference such an income gap between US and China can make, the role of China's currency policies should really not be exaggerated too much to score political points.

A misunderstanding of China's currency policies, no matter how popular it may be, is still a bad one.

Before the US government steps further to press China to revalue its currency, it should carefully examine all the consequences of such ill-advised move.

Not to mention the contribution of a relative stable Chinese currency to the world economy in time of crisis, the US government should display due appreciation for China's continuous purchase of US treasury debts with foreign exchange reserves.

A revaluation of the yuan, the Chinese currency, will not only result in a capital loss for China's holding of US treasury debts immediately but also discourage future purchase of such US bonds. America simply cannot have it both ways by expecting China to continue to provide more funds while incurring capital loss by revaluing its currency.

For China, the largest foreign holder of US treasury debts, the recent hike of US debt ceiling to $14.3 trillion appears to be a new cause for concern.

To dispel it, the US government should stop making the Chinese currency a false answer to its domestic problems.